Those who hold out on transparency might regret it

June 1, 2006

Transparency. If that's not the hottest topic in managed caretoday, I don't know what is. So many of the consumer-directedhealthcare advocates I've talked with this year have told me thattransparency will be the big coup for consumers, regardless ofwhich plan design they choose or how much they spend in any givenyear.

Transparency. If that's not the hottest topic in managed care today, I don't know what is. So many of the consumer-directed healthcare advocates I've talked with this year have told me that transparency will be the big coup for consumers, regardless of which plan design they choose or how much they spend in any given year.

Even if the adoption levels of high-deductible health plans coupled with health savings accounts were to level off at a lower-than expected penetration rate, it wouldn't negate the growing consumer desire to want to know what they're paying for upfront. Cost data (and its close cousin, quality data) is no longer just nice-to-know-it's need-to-know.

Proprietary or not, information is the new currency in healthcare, and disclosing data is no longer optional. HHS Secretary Mike Leavitt (see "Leavitt's Vision") has pledged to post itemized Medicare cost data related to medical procedures online. In a bold move, he's asking employers to make transparency stipulations in contractual agreements with plans and providers.

Public disclosure of financial information is expected by stock market buyers, otherwise they wouldn't buy. How much money have Americans invested in public companies? Now think about how much money Americans have also invested in healthcare directly and indirectly through taxes and higher-priced goods and services. It's a profound amount in both cases.

The healthcare organization that holds out too long on transparency might find that employers and other customers will take their hard-earned dollars elsewhere. It's not just about accountability and credibility, but market competition as well.

As much as we're all bored with the Enron scandal by now, it did bring to light some runaway issues in the business world and taught ethically operated organizations a few lessons about practices that might come off as suspicious. Businesses wasted no time in reinforcing their organizations' ethical guidelines to provide peace of mind to their clients. The basic message was, "We're not like them, so please be assured that you can continue to do business with us safely."

To a lesser degree, there has been distrust among customers in the PBM segment, evidenced by lawsuits and other negative attention, which has led many PBMs to respond. The segment has begun its evolution with some new business models that include greater transparency regarding rebates, costs and value. Those that don't reinvent themselves know they risk becoming so misaligned that soon they might not be able to operate effectively. Some have gone the customer pledge route, and some newer players on the field have started with a transparent model from inception.

How far we can go with transparency remains to be seen, of course. The downside could be overall higher prices, warn some economists. In other words, once sellers see the highest price, they all will want to charge that amount. Perhaps the price negotiation process itself will undergo an extreme revolution that no one is prepared for. Will surgeons start to sell hernia operations on eBay? That's an exaggeration perhaps, but undoubtedly someone has thought of it.